WIREDGOV

Red tape cut for small charities

CABINET OFFICE News Release (CAB023/09) issued by COI News Distribution Service on 31 March 2009

Thousands of small charities will save up to £5million a year as the Government cuts red tape by raising the income thresholds above which stricter accounting rules apply.

From 1 April the Government is giving charities more freedom to dedicate their time and money to making a difference rather than paperwork. The changes will make the regulations more proportionate to the risks so that donors can be confident that charities are accountable while more of their money will end up directly helping the charitable cause.

Kevin Brennan, Minister for the Third Sector, said:

"This means more money can get to where it's really needed. These changes will particularly help small charities that are playing a vital role in communities suffering the impact of economic downturn. The Government has a £42million package of recession support for charities and will continue to make important changes such as these to help them thrive."

Andrew Hind, Chief Executive of the Charity Commission said,

"Today's welcome changes to financial thresholds should make a material difference to nearly 50,000 charities as they report on their finances and activities - striking an important balance between proportionality and accountability."

Key income threshold changes, coming into force from 1 April include:

* Raising the threshold above which charities prepare accruals accounts from £100,000 to £250,000 - around 11,700 in this category will benefit.

* Raising the threshold above which accounts must undergo external scrutiny from £10,000 to £25,000 - benefiting around 37,000 charities.

* Increasing in the threshold above which charities submit annual accounts and Trustees Annual Reports to the Charity Commission from £10,000 to £25,000 - this will benefit around 23,000 small charities.

Ron Norey of the Association of Church Accountants and Treasurers, said:

"The Association of Church Accountants and Treasurers warmly welcomes the increase in the Accruals threshold from £100,000 to £250,000. Church treasurers are generally ordinary church member volunteers, and though they must have basic skills in simple book-keeping and accounts, many are less able to prepare the more demanding statements obligatory in the Accruals basis.

"The level of expertise they perceive to be required deters church members from volunteering to be treasurer. Extending the base for the less demanding Receipts and Payments basis should also provide a considerable boost to the recruitment of new and successor candidates to fill the post."

Wendy Dacey, Village Halls Adviser for the Community Council for Berkshire said:

"I am delighted that the threshold at which charities need to have their accounts externally examined, is to rise from £10,000 to £25,000 from 1 April 2009. Many village halls are charities, run by volunteers, but as public buildings have many rules and regulations which they have to comply with.

"Village hall committees have sometimes had to pay someone to examine the accounts so this will result in cost saving and is particularly important when halls had exceeded the £10,000 threshold because they had received a grant to carry out improvements in the halls. This ring-fenced money sometimes meant that halls then incurred a cost which would not otherwise have come about."

All charities, including those with annual incomes under £25,000 must prepare accounts and make them available on request. The changes to accounting thresholds followed a consultation held jointly by the Office of the Third Sector in the Cabinet Office and the Charity Commission.

Notes to editors
1. The Order making the necessary amendments and an explanatory note can be found at http://www.opsi.gov.uk/si/si200905 , under number 508.

2. Today's threshold changes are the result of a consultation on financial thresholds mentioned in the Charities Act 2006. This consultation was run jointly by the Office of the Third Sector and the Charity Commission in 2008. The Government's response to the consultation was published on 1 September 2008.

3. The Charity Commission is the independent regulator for charitable activity in England and Wales. See http://www.charitycommission.gov.uk for further information or call our contact centre on 0845 300 0218.

Cabinet Office Press Office
http://www.cabinetoffice.gov.uk